Keystone XL will be a “major driver” of oil sands expansion that significantly raises the risks of climate change, said Tom Steyer, a former hedge fund manager who has spent some of his fortune fighting the pipeline.
Steyer spoke today at a Washington conference that his group, NextGen Climate Action, sponsored to respond to President Barack Obama’s declaration that he wouldn’t approve Keystone if it were found to lead to a major increase in carbon-dioxide emissions.
“I think what people don’t understand is the magnitude of the asset and the magnitude of the production increases” that would follow Keystone’s approval, Steyer said in an interview following his address this morning. “Once it’s built, it will enable this thing to run for decades.”
The summit was held at the same Georgetown University campus where Obama laid down his climate marker in a June speech. “The net effects of the pipeline’s impact on our climate will be absolutely critical to determining whether this project is allowed to go forward,” Obama said.
TransCanada Corp. (TRP), based in Calgary, first proposed the link between Alberta’s oil sands and refineries in the U.S. Gulf Coast more than five years ago. Obama rejected the original application, though construction on its southern leg is nearly complete. The State Department is now reviewing a line that would run from the border to Steele City, Nebraska.
A TransCanada spokesman didn’t respond to a request for comment on Steyer’s interview, though company officials have said the pipeline will create thousands of construction jobs and improve the U.S. energy security by reducing reliance on oil imports from countries that aren’t as close an ally as Canada.
The pipeline has become a flashpoint in the debate over climate change because the production and mining of Alberta oil sands release more carbon dioxide than conventional forms of oil.
A draft environmental analysis by the U.S. State Department, which oversees the Keystone application because it crosses an international border, found the project wouldn’t have much of an impact on the climate because the oil sands would be developed anyway, and moved to market by rail.
The U.S. Environmental Protection Agency, which is advising the State Department as it completes the environmental review, called for a fuller market analysis. The State Department may release a final environmental analysis this month.
Steyer, a billionaire who founded Farallon Capital Management LLC and major donor to the Obama campaign, said Keystone would make it probable that oil companies would increase production beyond the estimated 168.7 billion proven reserves in part because it will enable producers the opportunity to get a better price for their oil.
Canadian crude now trades at a discount to West Texas Intermediate, a U.S. benchmark price. With Keystone, the economics of the oil sands will be improved, generating new investment and production, Steyer said.
“There is absolutely no doubt that the entire world is watching to see what we do on this and is going to take this as a straw poll on how seriously the United States takes climate,” Steyer said. “I don’t think there is any question on that.”
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